IPE DACH Briefing: Germany goes to the polls

Germany will go to the polls on Sunday in an historic election with the latest surveys predicting an exceptionally good result for the far-right party Alternative for Germany (AfD), with the far-left Die Linke (The Left) party gaining ground, leaving established parties struggling to form a stable governing coalition.

The advance of far-right and far-left populist parties, a deep economic crisis, social and political turmoil seem to be a cause for discontent among the population that can force the next government to change policies drastically. People are worried about pensions, too.

A woman working in the care sector told chancellor Olaf Scholz during a town hall this week that pensions are “not enough” after 45 years of work. She asked him: “Is it fair that I have to continue working as a pensioner, and reach the poverty line?”

During the same town hall meeting, a 56-year-old employee of ThyssenKrupp – a German industrial engineering and steel production multinational conglomerate – told vice chancellor Robert Habeck he contributed to his pension for more than 40 years already, and he will receive a pension amounting €1,300 per month, with €200 deducted for tax reasons.

“€1,100 remain for me to live on after 50 years of employment, how is that supposed to work?,” he asked Habeck.

German social partners representing employees and employers have warned that political parties lack new ideas and proposals for the next legislative period on occupational pensions.

The same can be said about the first pillar statutory pensions as the country’s political parties promise a stable level of pensions without giving details on how to finance the plan, according to a study by the Ifo Institute for Economic Research.

The German Insurance Association (GDV) has called the government to reform the three pillars pension systems without delays after the election. The association backs the third pillar reform drafted by former finance minister Christian Lindner that would cut guarantees on private pensions declining in numbers.

The economic crisis in Germany has overshadowed discussions on climate change and climate protection, putting emphasis on a more competitive economy free from excessively entangling regulations.

The sustainable finance advisory group advising the German government has recommended it amends the Sustainable Finance Disclosure Regulation (SFDR), and the Corporate Sustainability Reporting Directive (CSRD) to simplify reporting rules that are a burden for companies.

Switzerland

In Switzerland, a study revealed that pension funds and insurance companies can do more to unlock investments in private markets to support the domestic economy.

Pension funds are sticking to gold investments, at times increasing allocations to the asset class, amid a bullish market and positive returns achieved for example by Migros Pensionskasse and Publica.

Items to note:

• The IPE Real Assets Seminar Series 2025 is starting in March 2025, with one event in Quai Zurich Campus, on Wednesday 26 March

Luigi Serenelli

IPE DACH Correspondent